uying a used car almost always means selling one, too - your own. If you're shopping at a dealer, trading in your present car as part of the transaction is certainly the easiest strategy, but is it also always the smartest? And what if you're negotiating a private-party sale where a dealer is not involved? Microsoft CarPoint looks at three ways of getting rid of your present car. By comparing them, you should find one that works best for you.

Trading in your old car is the easiest way to cope. In fact, because even dealers of used cars generally want your trade-in, they make the procedure as easy as possible. Trading in a car is usually a same-day transaction with minimal fuss and bother. The dealer assesses the condition of your car, its age, and other factors and determines its trade-in-value. You can bargain over the trade-in value if you like, or simply accept the dealer's value. In the end, the amount the dealer gives you for your trade-in is deducted from the amount you pay for your new car.

Trade-in value is generally lower than the amount you could sell the car for yourself in a private-party sale, but by trading in you avoid significant pitfalls. You save time, effort and potential post-sale headaches. As Donna Reichle, spokeswoman for the National Automobile Dealers Association, explained, "If you sell your car yourself you are basically making yourself available to the buyer. When you trade in your car to a dealer you absolve yourself of liability."

Trading in is about convenience - there are no advertisements to place, no test drives to arrange, and no legal battles to fight if your recently-sold car breaks down. For those people without the time or inclination to sell a car on their own, trading in makes sense. Once a car is in the dealer's hands, it's the dealer's responsibility to prepare it and handle the resale.

Of course, for those efforts and responsibilities a dealer is justified in setting a suggested retail value on the vehicle that is higher than the trade-in value. The higher price covers refurbishing, marketing costs, "and, frankly, dealer profit," said Reichle. "The next person buying the car gets the advantages the dealer has put into it," she added.

Trading-in may also offer a tax advantage if you are buying a vehicle at the same time. In most states, according to dealers and regional authorities contacted by CarPoint, when your car is taken in trade you only pay sales tax on the difference in cost between its trade-in value and the price of the new car. For example, if a dealer gives you $10,000 on your trade-in and the purchase price of the car you are buying is $25,000, you'll only be required to pay sales tax on the $15,000 difference between the two amounts. (The dealer pays the sales tax on your trade-in, just as if they had purchased the car from you, which sometimes they do.) In states with a high sales tax, this benefit can help narrow the difference between trade-in value and private-party price.

Selling a car on your own is good insurance that you'll obtain top dollar, and it may be your only option if you are buying a car through a private-party sale. But be aware of the work involved. Prepping your car for sale will take time, and depending on its condition may also cost you some money. Honestly assess the car's condition, and then decide how much you want to spend on minor repairs, always remembering the liability involved with a private-party sale. Be sure to fix things well enough to avoid running into possible legal troubles further down the road.

Once the vehicle has been cleaned and repaired, you'll need to determine what it's worth. All of the dealers interviewed by CarPoint suggested using Kelley Blue Book values as a starting point. By looking at both the trade-in and suggested retail values listed by Kelley, you can determine an asking price somewhere between them. Also check your local paper's classifieds, and newsstand publications containing used-car ads. Look for listings of cars similar to yours and compare their asking prices. Using multiple sources helps assure that you arrive at a fair and realistic asking price.

The next step is to advertise and field phone calls. Since most private-party vehicles are sold through local classifieds or used-car publications, start by placing ads in those but be prepared to advertise in multiple sources. Remember to calculate the costs involved. If the car doesn't sell right away, make sure you can afford to run ads for an extended period of time if necessary.

After the ads have been placed, remember to set aside time to answer phone calls and meet interested parties for test drives. Prepare yourself for possible scheduling hassles like multiple buyers wanting to see the car at the same time, and for negotiating in general. How low a price will you really accept? How will you handle competing offers and other dilemmas?

When you finally find a buyer and have the money in hand, the last step is to transfer the title and registration, and cancel your insurance on the vehicle. Selling a car yourself does take time, but if your goal is to get the most money for it, you need to be willing to make the sacrifice.

Another way to get rid of your used car is to donate it to charity. While an attractive alternative to many people just on principle, others find that the greatest advantage of donating a car is the ease with which it takes off their hands a low-value, hard-to-sell vehicle that otherwise would require unusual effort to dispose of.

Donating your car also may reward you with an income tax deduction. But before going too far be sure of your tax position. Interviewed by Microsoft CarPoint, Karl Bargmeyer, spokesman for the IRS in Seattle, suggested that, "to be safe, you should consult with the IRS or talk to a tax advisor before making sizable donations such as a car."

Suppose you do decide to donate? There are two main things you need to know: a qualified organization to which you can make your donation, and the so-called fair market value (FMV) of your car.

Qualified charities include most churches, synagogues, temples, mosques, and other religious organizations, as well as federal, state, and local government programs, and nonprofit schools and hospitals. As defined by the IRS in Charitable Contributions, Publication 526, "Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all relevant facts."

Subject to advice from your tax authority, you can determine fair market value the same way you can figure asking price in a private-party sale - that is, by consulting publications such as Kelley Blue Book and local classifieds. You will need the fair market value when calculating the allowable deduction on your income taxes.

Be aware that there are minimum limits below which contributions may not qualify for deductions. For example, if you have significant annual income and plan to donate a car with a low fair-market value, the percentage of your adjusted gross income represented by the car's value may not be enough to allow you to deduct it.